Determinants of financial deepening in Mexico : a dynamic panel data approach

Isela Elizabeth Téllez-León, Francisco Venegas-Martínez

This paper aims to study the determinants of financial deepening (FD) in Mexico. FD is measured as the fraction of total credit assigned to private sector as a proportion of GDP. The explanatory variables include: enforcing contracts (rule of law) and institutions; bank regulation; bank competition; formal labor; and financial literacy, among others. The data contains information of each State of the Mexican Republic. The model estimation is performed by using ordinary least squares (OLS), robust least square (RLS) with several weights functions (to deal with outliers), and a dynamic panel model (DPM) estimated with the generalized method of moments (GMM). The main findings are that: 1) the rule of law, 2) financial savings, and 3) financial education are the main determinants of financial deepening in Mexico.

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Alternative title:	Determinantes de la profundad financiera en México : un enfoque de datos de panel dinámico
Year of publication:	2019
Authors:	Téllez-León, Isela Elizabeth ; Venegas-Martínez, Francisco
Published in:	Revista de métodos cuantitativos para la economía y la empresa. - Sevilla : [Verlag nicht ermittelbar], ISSN 1886-516X, ZDB-ID 2584041-1. - Vol. 27.2019, p. 285-299
Subject:	Financial deepening \| factors affecting financial deepening \| econometric modeling \| Mexico \| Mexiko \| Finanzmarkt \| Financial market \| Panel \| Panel study \| Finanzsektor \| Financial sector \| Schätzung \| Estimation